The BRICS alliance could gain control of the majority of the world's oil and gas trade by including Saudi Arabia and the United Arab Emirates, which could lead to a shift away from the USD and the de-dollarization of the oil economy.
The US Dollar strengthens as several BRIC countries express support for the currency, while Fed officials remain quiet on rate cuts, and geopolitical tensions boost the Greenback during US trading hours.
Russia has called on the BRICS alliance to abandon the US dollar for trade settlements and instead embrace local currencies, in a continuation of the bloc's de-dollarization efforts.
BRICS, comprised of Brazil, Russia, India, China, and South Africa, now represents almost a third of global GDP and is surpassing the economic influence of the G7, with over 40 nations expressing interest in joining.
Brazil's President proposed the creation of a common currency for BRICS nations to reduce their vulnerability to dollar exchange rate fluctuations, although officials and economists have acknowledged the challenges of such a project.
Brazil's President, Luiz Inacio Lula Da Silva, announced at the BRICS Summit that the economic alliance will officially abandon the US dollar for trade settlements, aligning with de-dollarization efforts and expanding to include six additional countries by 2024.
South Africa's finance minister says that the BRICS grouping will not replace international payment systems like SWIFT but will explore creating one that strengthens trade in local currencies.
The BRICS summit is aiming to reduce reliance on the U.S. Dollar, as the coalition confirms new members including UAE, Egypt, Ethiopia, Saudi Arabia, and Argentina, and discusses the possibility of a new payment system and currency backed by gold.
The article discusses the challenges of dollar hegemony and argues that the attempt to create a Brics currency is misguided due to the vast differences in the economies and political systems of the Brics countries. It suggests that the world needs a better currency system, as the current one heavily relies on the US dollar which poses risks to the global economy.
The BRICS summit focused on increasing the use of local currencies for trade, but there were no discussions about a digital currency; however, three non-BRICS countries also announced plans to use local currencies instead of the dollar for cross-border trade.
BRICS is considering making local currencies the only accepted form of payment for oil and gas settlements, which could potentially shift global power from the West to the East.
The BRICS nations are divided on the issue of de-dollarization, as statements from the bloc's leaders indicated, despite discussions about the creation of a common currency to rival the US dollar.
The dollar is not likely to lose its status as the global reserve currency despite the expansion of the BRICS group of nations and their aim to find an alternative, as technology and not commodity-based currencies are expected to be the driving force in the future.
The BRICS expansion and their de-dollarization efforts have been met with a relatively calm response from the US, Germany, and the European Union, emphasizing the importance of countries choosing partnerships based on their national interests.
JP Morgan predicts that the U.S. dollar is at risk of losing its global reserve status as BRICS countries increase their use of local currencies for trade settlement, although the chances of this happening in the near future are slim.
The extended BRICS alliance, which now includes six new countries, has a GDP in purchasing power parity (PPP) that accounts for more than one-third of the global economy, giving them the potential to control exports of oil to the West and influence trade settlement currency choices.
The BRICS alliance is considering the creation of a 'single unit account' as an alternative currency to the US dollar, in order to settle cross-border transactions without depending on a single currency or local currencies.
Developing countries, including members of the BRICS and ASEAN alliances, are actively seeking to reduce their dependency on the US dollar and promote their local currencies for global trade, with a total of 21 countries officially agreeing to ditch the US dollar in 2023.
Creating a BRICS currency backed by gold is considered nonsensical by a former Bank of America strategist, as it would essentially be another gold derivative and would weaken individual currencies within the group.
The BRICS expansion, which includes countries like Saudi Arabia, the UAE, and Iran, has raised concerns in the U.S. and EU as it poses a threat to Western-dominated financial markets, while China's influence grows and the alliance aims for de-dollarization in global trade.
Developing countries, including the BRICS alliance, are looking to end reliance on the US dollar due to increasing debt and the threat of inflation, which could lead to a decline in the dollar's value and a rise in prices. Economist Peter Schiff warns of a tragic ending for the US dollar if other countries continue to move away from it.
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